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Industrial strategy success hinges on infrastructure, say small firms

The Federation of Small Businesses (FSB) is urging the Chancellor to deliver promised improvements to digital and road connectivity while removing barriers for small housebuilders at his Autumn Budget next month.

In November 2015, the Government committed to implementing a UK-wide Universal Service Obligation (USO), designed to give everyone access to broadband by 2020. Two years on, FSB is calling on the Government to decide how this will be achieved.

As part of its Autumn Budget submission, FSB has also put forward a series of recommendations aimed at boosting output among smaller housebuilders in England. They include reforming the Community Infrastructure Levy (CIL), increasing public sector provision of small development sites and simplifying the planning system.

Independent research conducted by Cebr earlier this year on behalf of FSB shows policy-linked costs for small construction firms rose 34 per cent in the five years to 2016. That compares to a cumulative Consumer Prices Index (CPI) of 7.7 per cent for the same period.

Mike Cherry, FSB national chairman, said: The UK has slower download speeds than Romania, Bulgaria and Thailand. We welcome the Government’s commitment to an ambitious industrial strategy. But clearly we’re not going to have an economy of highly-paid, highly-productive workers when a significant proportion of businesses can’t even access the internet.

“It’s been two years since we were promised a USO. Whether honouring the Obligation as agreed by Parliament, or taking up BT’s offer to expand services, Government must have the interests of small businesses and households front of mind as it reaches a decision.

“We need to see a plan setting out exactly how UK broadband will improve as soon as possible. Doing so will give some measure of confidence to businesses, especially those in rural areas where connectivity is typically poorest. The future of business is digital. Small firms and the self-employed in rural areas must not be left behind – or indeed face any hidden broadband fees.

“Given we have a chronic housing shortage, it’s extremely disappointing to see small developers stifled by a complex planning regime, soaring business costs and restricted access to smaller sites. What’s more, small construction firms bear the brunt of our late payments crisis.

“DCLG’s guidance on the Community Infrastructure Levy runs to 30,000 words. Yet for all that prose, it doesn’t allow for the higher costs that come with small projects. Such projects are integral to providing business owners and employees with the homes they need.”

In July, the Government put forward the Major Road Network (MRN) initiative, which would see substantially increased investment in routes under local authority control across England. FSB is calling on the Chancellor to show support for delivery of the MRN at the Budget.

The country’s largest business group is also urging the Chancellor to protect the Small Business Research Initiative (SBRI). The SBRI gives innovative firms the opportunity to trial new ideas in response to specific challenges faced by the public sector, delivering better value for the taxpayer in the process. FSB is also keen to see the mooted Industrial Strategy Challenge Fund developed with a focus on smaller businesses.

Mike Cherry added: “Achieving a game-changing productivity boost will only happen through incremental gains among the smaller firms that make up 99 per cent of our business community.

“What we hear from small firms is that roads, and local roads in particular, really matter when it comes to mobilising goods, services and staff. The Government has pledged significant investment in roads outside of motorways – it’s now time for them to deliver. The Transport Secretary’s £345 million commitment last week marks a welcome step forward, but there’s far more work to be done.

“Promoting innovation must be central to the Government’s industrial strategy. The Budget is the Chancellor’s opportunity to position the UK as best place in the world to invest, innovate and grow.

“We look forward to him seizing that opportunity by ruling out any new business tax increases, maintaining entrepreneurial and investor reliefs and expanding fantastic initiatives such as the SBRI and R&D tax credits.”

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